Nokia agrees on 'Shanghai Bell' joint venture with China Huaxin

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The Nokia headquarters is seen in Espoo, Finland, July 28, 2015. REUTERS/Mikko Stig/Lethikuva

HELSINKI (Reuters) - Finnish telecom equipment maker Nokia said it had agreed to create a Chinese joint venture with Huaxin in a move that could pave the way for China’s approval for Nokia’s proposed takeover of Alcatel-Lucent.

The joint venture, to be named Nokia Shanghai Bell, will be built upon a similar, long-time joint venture between France’s Alcatel-Lucent and China Huaxin, which is a state-owned Chinese investment company.

According to a memorandum of understanding, Nokia said it expects to hold 50 percent plus one share in the new joint venture, with Huaxin holding the remaining shares.

China is the last major jurisdiction still to approve Nokia’s 15.6 billion euro ($17.6 billion) takeover of Alcatel.

“With this MoU now in place, we will... work closely with our new partners to make the case for swift approval of the proposed combination,” Nokia CEO Rajeev Suri said in a statement.

Nordea analyst Sami Sarkamies said the joint venture deal was a promising sign.

“If they have agreed that with a state-backed partner, it likely means that there will be green light coming for the whole (Alcatel) deal.”